"Rainbows always appear after rains," China's state media said over the weekend, in a blatant attempt to create the conditions for a self-fulfilling prophecy when the country's battered equity markets opened for trading on Monday.

China's brokers and mutual funds each took steps on Saturday to help stabilize the market which has collapsed 30% in just three weeks, thanks in part to a massive unwind in the shadowy world of backdoor margin lending.

On Sunday, the China Securities Regulatory Commission announced that China’s central bank is set to inject capital into China Securities Finance Corp which will in turn use the funds to help brokerages expand their businesses and reinvigorate stocks. Translation: China’s central bank is now underwriting brokers’ margin lending businesses.

Now, the trading week is officially underway and the above-cited "rainbow" thesis is being put to the test early and often as panicked housewives and banana vendors looking to sell the rips battle the PBoC for control of an insanely volatile market.

"A dealer said the fall in the ringgit was in tandem with other regional peers as demand for emerging-market assets was dampened by the increasing risk that Greece will exit the eurozone after the country voted to reject the terms of a bailout."

While much of the world’s attention remains focused on the Greek debt crisis, another financial storm of much greater proportions is brewing on the other side of the world. In a dizzying drop, the Chinese stock market has lost about $2.7 trillion, or about a quarter of its value, since June 12 — an amount equivalent to six times that of Greece’s foreign debt. Much of the lost wealth has hit the pocketbooks of middle-class Chinese. As China’s government rushes to prop up prices, millions of Chinese are on tenterhooks as they anticipate a Monday opening that could make or break their finances, and perhaps their confidence in the market’s future.

The Chinese government, widely seen as having staked its legitimacy on stable economic growth, has been active since once-sizzling stocks began to swoon in mid-June. Over the past several weeks, the government has cut interest rates, lowered capital requirements for banks, and released a draft law that would allow state-owned pension funds to invest in the markets. None of those measures staunched the bleeding, and after another brutal week for stocks, the government has used the weekend to announce major moves, some unprecedented. These include a moratorium on new initial public offerings on the Shanghai and Shenzhen exchanges, as well as the establishment of a $19.4 billion fund to buy shares in hopes of propping up demand. With the market due to open as usual on Monday morning, many in China are wondering aloud if those measures will be enough to stop the free-fall.

"The promise of the minister of finance that the banks will open tomorrow and that money will be available for tomorrow and Tuesday seems to me very difficult and dangerous. And, therefore, because I believe that the Greek people will be, during the week and even every day in a more difficult situation, I think we should tomorrow, at the latest on Tuesday for the Eurozone summit discuss a possible humanitarian aid program for Greece," Schulz said on Sunday.

For a reason yet to be determined, locals are telling me via telephone that there is now a sudden and extraordinary uptick in activities at the Greek Naval Base at Salamis. Others they have spoken to elsewhere in the country are also noticing sudden and heavy activity at various Greek Air Force Bases

Why would Greece be mobilizing its Air Force and Navy?

...

********* Update 8:38 PM: At least one Air Base involved in the sudden uptick in activity is the one located in a place called Eleusis.

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